Next-generation plan crucial Flexible family options
STARTING a business is a momentous event in any small company owner’s life.
What follows is a long, consistent effort to make the business a success and keep it that way.
But when it comes to deciding what to do with that company when the founder has had enough, more thought and energy is required.
Small and medium-enterprise owners say business planning is their biggest concern while succession planning is their second biggest worry, Prosperity Advisers’ 2016/17 SME Research Report found.
A business can be all-consuming mentally, physically and financially. An owner’s home and super are often tied up in the company’s capital and if they want to realise that capital they need to put a strategy in place very early, according to Allan McKeown, co-founder and chief executive of business and accountancy firm Prosperity Advisers.
“Many might have an idea (about succession) in the back of their mind but those that make a plan will incorporate it as a part of due process and have a proper rigorous think about it,” Mr McKeown said.
He said there were two aspects to succession: managerial succession where you recruit talent into the business to grow it, or to eventually run it; and how to realise the capital invested in the business so you can retire.
No matter how small your operation, Mr McKeown advised seeking external advice from an expert or a trusted mentor.
“Have a catch-up every three, six or even 12 months about how the business is going and what your options are,” he said.
It is also important to have a solid understanding of exactly how much your business is worth and, if you are planning to sell it, not to leave it too late.
“People have an opaque view of what their business is worth. You might be forced into selling it sooner than expected due to illness or financial misfortune. That creates pressure and you may have to sell at a value that’s less than you were hoping for,” Mr McKeown said.
“As early as possible you need to start diversifying your investment, which is hard when you are investing everything into growing a business. That might include adding money to savings, super or an investment property.”
Family business adviser Philip Pryor agreed that planning well ahead was key to an effective succession plan.
“In a family business you need to be thinking at least 40 years ahead,” Pryor said.
If you do plan to pass the business on to the next generation, or hire an external chief executive to run it, you need to make sure the founder has a role under the new leadership. JUST three months since establishing his family business, Musa Serin has big plans for his two sons and daughter who help operate the Zara Cafe in Cannington.
Mr Serin (47) plans to expand the fledgling business specialising in Turkish cuisine, envisaging franchises and a larger restaurant in the future.
He said he hoped his children would help him with his plans by operating franchises around Perth once established.
But he is realistic about the difficulties of small business and said his son Enes (19) and daughter Bursra (22) had alternative careers they could go to if they no longer wanted to be a part of the business.
“I am going to teach them now so they can run the franchises,” Mr Serin said.
“Business is always a bit risky.
“They have other careers they can go to. They can go their own way if they want to.
“My son, who is 19, is a qualified auto electrician; he does the service in the cafe and makes the kebabs. My daughter is a qualified teacher’s assistant and she helps with service.”
His youngest son Esat (13) helps in the cafe after school.
Mr Serin’s wife, Emine, is the cafe’s chef, providing Turkish cuisine for breakfast, lunch and dinner.
“I know what I am doing and I love what I am doing,” Mr Serin said.
“Service has to be great and the product has to be fresh.”
He said his dream was to open a two to three-storey restaurant that included a steak house and kebab house, with an entire level dedicated to sweets. He has no plans to retire. “I am not interested in retiring and staying at home doing nothing. If I do retire, I will do some sort of work at home,” he said.
Musa Serin (right) and his son Enes at the family-run Zara Cafe in Cannington.